Theses Pieces

The harsh glare of guilt washes over me as I write this, for I have been absent from these pages for three months. In my defense, let me assure you that my lack of posts were due neither to a lack of desire nor a lack of interesting content, but rather a vicious combination of busy schedule and no internet at my sub-leased apartment. Things have moved on, of course, so I can’t really write about Washington in detail now that I’m back in Boston, but I suppose a recap is in order.

As my second semester in Boston University communication master’s program began, O’Neill and Associates, New England’s foremost (honestly!) government affairs firm, took me on as an intern. Thanks to my mentor, Suzanne Morse, the experience was invaluable, trusting me as she did with grown up tasks and taking the time to explain the business. Nevertheless, as both semester and internship wound down, I began to wonder how I might weasel my way into a summer internship in Washington. Suzanne, upon learning this, suggested I sit down with the firm’s eponymous CEO, Thomas P. O’Neill III, and ask about interning at O&A’s Capitol Hill office. Several seconds after sitting down with him, Mr. O’Neill was on the phone to HR ordering I be sent to the District.

It should be pointed out that, as in Boston, my internship in Washington was part time, but I arrived inside the Beltway with plans for the remaining portion of my summer. Before leaving Boston, one of my professors, Dr. Edward Downes, asked if I’d be willing to help him with some research, in return for his help on a thesis about congressional press secretaries and their use new media, should I wish to write it. Keep in mind that a thesis is one of two graduation requirements in my program, the other being comprehensive exams. As the exams would be just as much work but with nothing to show for it at the end, I agreed to Dr. Downes’ proposal.

As a result, one half of my time was spent at O&A’s Capitol Hill office, my work covering a host of fascinating topics (including one in which I have a borderline Asperger’s degree of interest and knowledge) about which I can’t say a thing due to a series of non-disclosure agreements. I can, however, mention the steady stream of network camera crews and black Town Cars arriving for Peter Goelz, to either conduct in-office interviews or take him to in-studio interviews; as well as the impossibly regular sight of women in hot pants sashaying into Michael Flood’s office, delivering heaping plates of food and cooing in foreign accents.

The other half took two forms: June and July were spent combing through the Library of Congress for what would become my literature review. Interviews, meanwhile, were conducted in August, staffers having more free time while Congress is on its month-long summer vacation, a traditional recess coming not from Congress’s suspected aversion to work, but from health concerns born of the extreme heat and humidity of August. (Until relatively recently, British diplomats earned hardship pay while serving in Washington.) I can attest that even with my good lungs, a five minute walk left me feeling as though I had been breathing through a pillow.

Now, of course, it’s September and I find myself back in delightfully cool Boston, staring down the barrel of my yet-to-be-written thesis. It also happens to be the point at which this blog takes a new focus. As you’ll recall, my thesis topic is congressional press secretaries and their use of new media, a category into which blogs fall. As a blogger, there may be an opportunity to further my understanding of the topic at hand by chronicling the writing of my thesis. Should I also enrich my source material along the way, so much the better.

So watch this space between now and Christmas—either you’ll share in the feeling of accomplishment gained from a completed thesis, or you’ll derive some perverse enjoyment from watching me go to bits.

Where Did You Go?

Greetings, one and all from our (provided you’re American) nation’s capitol, Washington, DC! Actually, greetings from a nearby commuter suburb, Silver Spring, Maryland!

Yes, that’s right: I no longer live in Cambridge. Granted, my tenure in DC is a temporary thing; my last semester at Boston University awaits come the beginning of September, so back I go in late August. But in the meantime, here I am, inside the Beltway.

Whatever the negative connotations of “inside the Beltway” might be, it’s nevertheless where (if I’m honest with myself) I’ve always wanted to be. Go ahead and label me as schmaltzy, but I get kinda emotional when I see things like the Capitol and the Washington Monument. I certainly don’t succumb to anything like jingoism when it comes to my country, but I’d like to think I have something like a reasoned, intellectual patriotism. Nevertheless, I’m proud to be an American, and screw you if you don’t like it.

That being said, what of life in DC versus life in Boston? My first impression came while driving down I-95 in Maryland. My oft-mentioned Jeep was a wise investment considering its battlefield-spec suspension and the Bay State’s battlefield condition highways and byways. Not so much necessary in Maryland, however; the roads here are smooth as glass. The downside, of course, is that everybody’s too cautious to drive over 60 mph and they all actually follow the rules of the road. Between that and the general frowning upon jaywalking around here (I’ve already been yelled at), I’m suffering the Masshole equivalent of a nic fit.

One thing I’ve been quite impressed with, however, is DC’s subway system. It’s not dissimilar from the Bay Area Rapid Transit system, in that it functions as a subway in the city center, and as a commuter rail of sorts to the inner suburbs, both in the District itself, as well as southern Maryland and northern Virginia. And again, like BART, riding the Washington Metro is, in comparison with Boston’s MBTA, like riding the Disney World monorail.

Anyways, I’ll leave it at this for now, but for anyone who doesn’t get that this post’s headline not only refers to my prolonged absence from my own blog, but to a song, as well, the video up top will help.

Breaking Up Is Hard to Do

Unless you’ve been living in a cave for the past year or so, you’re well aware of the mayhem sweeping through the global financial system. Already the proverbial dead horse, there's no need for me to pile on and join the pitchfork-wielding Great Unwashed. Instead, I'd like to explore the pending issue of what should be done with Wall Street's TARP recipients once things have stabilized.

The rationale behind saving AIG, Citi, et al was they were too big to fail, a perfectly sound reason considering the fortunes of each and every one of us are inexorably linked with each and every one of them. But had those financial services firms never become so massive and so intertwined within the global financial system, I doubt we’d be in our current fix. Nevertheless, here we are, struggling to get out. We'll make it out of this hole, I'm sure of it, but keeping in mind the old adage about failing to learn from history, how do we guard against stumbling ass over teakettle into the same mess ever again?

First and foremost, Congress must do something about the Gramm-Leach-Bliley Act of 1999. Gramm changed American securities law in a number of ways, but as recent events have shown, none so significantly as its repeal of a provision in the Glass-Steagall Act of 1933 prohibiting banks, brokerage houses, and insurance companies from getting mixed up in each other's business. In his autobiography, The Age of Turbulence, Alan Greenspan assures the reader that Gramm would be a boon to all of us, which it likely seemed at the time. However, with the benefit of hindsight, we might question the wisdom of allowing AIG to dabble in high risk collateralized debt obligations.

Despite Gramm's unintended consequences, there is some good news: with the right federal legislation, American banks, brokerage houses, and insurance companies could be put back inside their respective silos; in any TARP recipient sorting out process, this would be the easy part. Unfortunately, there's a corollary to good news: only when compared to the rest of any TARP recipient sorting out process does the easy part look easy. AIG, for instance, may be restricted to its traditional business of insurance by force of law, but it would still be a massive company. What this means is that if at some point in the future, things went all pear-shaped again, Americans would once again be stuck in the same old jam. Thus, any financial services company currently deemed too big to fail must be broken up as soon as is practicable. That's the hard part.

American courts will allow legal action on just about anything, provided the plaintiff's complaint has a reasonable basis in law. For the purpose of breaking up financial institutions, the reasonable basis first to mind is the layman's favorite: the Sherman Antitrust Act of 1896. Sherman gave the federal government the legal basis needed to oppose in the courts combinations of entities potentially harmful to competition, and as anyone vaguely familiar with the Act knows, it also gave the federal government the power to break up offending entities.

In light of that, one could conceivably argue that, say, AIG (not that I’m deliberately picking on it) inhibits competition in the insurance industry by virtue of its sheer size and is thus a monopoly in need of breaking up. However, there’s a small problem: a monopoly is only in violation of Sherman if it unreasonably restricts trade. Paradoxically, our current pickle is the result of Gramm-Leach-Bliley creating, at least in terms of bourse volume, an excess of trade, so no dice there.

A further impediment to Sherman is that the companies whose monkey business got us into this mess aren’t monopolies, but rather oligopolies. An oligopoly is a market form in which a market or industry is dominated by a few sellers, precisely what the previous ten years of frantic consolidation on Wall Street has left us with. As should be clear to anyone who has read this far, oligopolistic market distortion is illegal in the intent of antitrust law, but as oligopolies aren’t monopolies, they don’t fall under the purview of antitrust law.

So what recourse is left? I’m no lawyer, so this carries no authority, but the Federal Trade Commission could revisit the Celler-Kefauver Act of 1950. Sigrid Stroux did a much better job of explaining Celler in US and EC Oligopoly Control than I could ever do, so let me quote her on why the Act was passed in the first place:

The perceived weakness of Sections 1 and 2 of the Sherman Act and Section 7 of [the Clayton Antitrust Act of 1914] to effectively control mergers spurred on Congress to strengthen the Clayton Act’s anti-merger provision. In 1950 Congress enacted the Celler-Kefauver Act, which amended Section 7 of the Clayton Act, expanding its application to assets other than stock.

The Celler-Kefauver Act sought to arrest what Congress saw as “a rising tide of economic concentration;” a trend mainly attributed to mergers. Concentration was feared because it would facilitate direct and indirect collusion among rival sellers.

Where exactly direct and indirect collusion fits in the present day, I won’t speak to, as it's a Pandora's box of conspiracy theories.

Apparently, mergers weren’t en vogue in the 1950s, as it took twelve years before the Supreme Court interpreted the Clayton Act’s amended Section 7. In Brown Shoe v. United States, the Court blocked the merger of Kinney, a chain shoe retailer, and Brown, a manufacturer. More important than the actual decision, however, was the rationale. Stroux summarizes the majority opinion, a portion of which follows:

Chief Justice [Earl] Warren…emphasized that Congress in 1950 sought to retain “local control over industry” and to protect small business. Congress was held to have “feared accelerated concentration of economic power on economic grounds, but also for the threat to other values a trend toward concentration was thought to pose."

The Court stated “[w]e cannot avoid the mandate of Congress that tendencies toward concentration in industry are to be curbed in their incipiency, particularly when those tendencies are being accelerated through giant steps striding across a hundred cities at a time.”

Or, to flip it around, the financial sector’s slew of buyouts and mergers over the past decade affected every city from coast to coast, reducing or eliminating local control over the domestic financial system.

As I said, I’m no lawyer and therefore lack the nuanced legal reasoning to make a cogent case for any of this, but through some creative application of law, the FTC may have the tools it needs to dismantle those tottering Wall Street leviathans. Failing that, Congress must give it the tools it needs. Whatever the case, Congress must first put banks, brokerage houses, and insurance companies back in their respective boxes, followed immediately thereafter by the steps necessary to ensure that no financial services company is ever again too big to fail. But just to be safe, maybe I'll hunker down in a cave for the next year.

PS: If you need help with the title and picture, click here.

Down The Drain

Tony! Toni! Tone Deaf! Part II

Visit msnbc.com for Breaking News, World News, and News about the Economy

In light of today's events, Steven Pearlstein reminds us that Wall Street is not the end-all, be-all of economic indicators, and occasionally needs to be told to put a sock in it.

Tony! Toni! Tone Deaf!

By now, I can safely say that I’m well into my second third of Boston University’s public relations graduate program and as such, I’m qualified to pass slightly better than amateur judgment on some of our nation’s business luminaries.

The overarching theme throughout my track towards a master’s of science has been what I call the “Yo Mama” philosophy. In essence, when conducting public relations, as long as one doesn’t do or say anything that would embarrass yo mama, things should be ok. Given that, I must conclude that nobody on Wall Street has or had a mother, as they all seem to make the worst possible decisions they can.

Eighteen billion in bonuses? New Gulfstream G5s? Junkets to Las Vegas? All on taxpayer money? Bonehead moves, each one of them, to say nothing of those that have yet to rear their heads, considering Wall Street’s apparently lazy learning curve. I won’t get into whether or not PR people at these various firms failed to realize the obvious or lacked a direct line of communication to the top brass, but the end result is a public relations disaster. When Barney Frank says that people now hate bankers, he’s not succumbing to hyperbole, he’s speaking the truth, and bankers have nobody to blame but themselves.

The irony for bankers here is that while they’re busy fighting the specter of increased regulation, their behavior only invites the very regulation they resist. When it comes to regulation, I find myself feeling a bit resistant, as I’m a firm believer in self-regulating capital markets, but behavior such as we’ve seen only makes me give tacit approval to increased regulation, if only as a punitive measure. President Obama’s capping of executive salaries at banks receiving public money is only the first of many regulatory moves.*

This post could, of course, go on forever with all sorts of William Jennings Bryan ranting and raving, but I’ll do my best to resist. The original focus, after all, was the disservice these banks do to themselves by acting as if they have no obligation to the public interest whatsoever. I don’t need to spell it out for anyone, but the public relations lessons of what we’ve seen (and what we’re bound to see) are obvious.

Wall Street lobbyists scold bosses & Frank to bankers: People hate you [via Politico]

PS: Inevitably, a few of you won’t get the reference in the headline, so here’s some help.

*Personally, I feel that anyone with the gall to complain about making only $500k a year deserves to be pilloried in the public square, but that’s a whole other kettle of fish.

More of The Same

As of now, forty-four men have held the title of President of the United States, passed from one to the next with a notable lack of drama. Even after the election of 1800, a remarkably venomous affair in which John Adams accused Thomas Jefferson of trying to import the French Revolution and Jefferson accused Adams of trying to have himself crowned King of America, everything worked out ok. So in the sense of procedural custom, today’s Inauguration wasn’t anything out of the ordinary.

Of course, there’s the little matter of the man who has been President since noon, Barack Obama. By this time next week, we will be up to our necks in scholarly works on what the ascension of the former junior Senator means to various matters of national profundity, a pile to which, for the sake of both of my readers, I will not add. However, I will take the liberty of expounding upon our new President and how he relates to yours truly.

For most of my voting life, I was a Republican, although in Massachusetts, a Republican is really just a Deadhead with an ISL education. The poster child for this combination of latin declension and Anthem of The Sun is former Governor of the Commonwealth of Massachusetts, William F. Weld, who, like me, defied his heady ingredients and became a distinctly un-radical Rockefeller Republican.

Regrettably, the past eight years have seen the number of Rockefeller Republicans in our nation's capital dwindle to near-Whig levels. Occasionally, it can seem as though they were never there, but back in Olden Times, Rockefeller Republicans were quite common in Washington. Without fail, they could be found amid the collegiate paraphernalia of The Tombs on Saturday nights, after which they would flock, like the swallows of Capistrano, to St. John’s church the following morning. Arrival time varied, but most Rockefeller Republicans at least made it in for the last half of the late service, after which it was off for brunch and bloodies. Sadly, in Today Times, pitchers of Bloody Maries go untouched and the shelves at J. Press just get dustier. Washington has no more Rockefeller Republicans, Karl Rove having long ago driven them from the city like songbirds from Beijing.

By late 2007, things were not looking good for me and my ilk, having been cast out from the District and resignedly watching the Clintons plot their triumphant return to 1600 Pennsylvania Avenue.* But then along came the first term junior Senator from Illinois. According to the Clinton campaign, what's-his-name was little more than a minor annoyance. Senator from one of Mrs. Clinton's four home states or not, he would soon be crushed. Which is, of course, not what happened.

I admit that, initially, I didn’t think much of then-Senator Obama, as I never heard anything about the man other than his long-standing opposition to the Iraq War. Furthermore, I’m instantly suspicious of anyone backed by groups of organized loud people, and Barack Obama had them in spades. Eventually, though, I managed to cut through the clutter and what I heard piqued my interest. Eloquent orations on personal responsibility, faith in the nation’s character, and justifiable pride in one’s country—precisely what a Rockefeller Republican, more than anything else, wants to hear from a President.

Needless to say, that included me, and I threw my support behind the unlikely candidate before the Iowa Caucuses, something I’m actually rather proud of.

But as much as I got from Barack Obama the candidate, can I expect the same from Barack Obama the President? Difficult to say. Americans feel unsure about themselves these days. A war of dubious pretense, an economy getting worse by degrees, a national deficit of such enormity it hurts the brain to think about it—we need reassurance and leadership, a tall order for anyone. But, as Milton wrote, "apt words have power to suage the tumors of a troubled mind.” That Barack Obama’s most evident strength is perfectly suited for exactly that task isn't a solution in itself, but it should at least be enough to convince us that if we do pick ourselves up and dust ourselves off, we can get through this.

Three cheers and godspeed to President Obama.

The Administration [via WhiteHouse.gov]

*Kudos to my mother for seeing it coming back in 1999.